BTC/USD and ETH/USD Producing Sudden Struggles
Two of the biggest heavyweights in the cryptocurrency market, Bitcoin and Ethereum, are experiencing bearish sentiment. Both BTC/USD and ETH/USD are near important mid-term support levels while taking different durations into perspective. Selling pressure has mounted, particularly over the past week-and-a-half, in digital currencies. Support levels have not only proven vulnerable, but they have been brushed aside easily.
BTC/USD was trading within sight of $64,500 on the 14th of April, but it sank to around $47,200.00 on the 26th of April. However, buying momentum reignited after the lows made towards the end of April, and by the 9th of May, BTC/USD was trading near the $59,750 mark. Today, BTC/USD is hovering slightly over $40,000 with fast market conditions exposed.
Technically, BTC/USD is trading near important support levels which were generated around the 6th of February. The ‘cheaper’ values in early February served as a lynchpin before Bitcoin enjoyed a dynamic bullish run, which raced to the high value of almost $64,500. Traders should take a look at the six-month chart of BTC/USD to consider the potential of further moves lower, if bearish sentiment remains strong.
Price Chart Indicating Bitcoin Weakness
From the first week of January until the end of the first week in February 2021, BTC/USD largely traded between $30,000 and $40,000. Technical and institutional traders of Bitcoin are certainly watching the current price action as they try to understand the potential direction of Bitcoin in the coming days.
Stronger Correlation of Bitcoin and Ethereum Developing?
ETH/USD traded near an all-time high of $4,400 on the 12th of May. While BTC/USD ran into headwinds after April’s record values and was not able to replicate its loftiest bullish trend, Ethereum outperformed Bitcoin. However, in the past week, price action for ETH/USD has taken on bearish undertones while it has begun to correlate to the broad cryptocurrency market quickly.
Today, ETH/USD is trading slightly below the $2,700 level, and yesterday’s selloff saw brief trading below $2,000. Selling in ETH/USD has brought the cryptocurrency near important one-month lows. The current price of ETH/USD may need to see sustained buying to help improve the courage of traders who still want to pursue bullish sentiment. If ETH/USD should begin to break below its current price levels, some traders may logically come to believe that the $2,000 level value is a target that could be hit if nervous conditions prevail.
ETH/USD Price Chart
Traders should note that in the first week of February, ETH/USD was trading near the $1,600 mark. This may prove to be a key support level if ETH/USD and BTC/USD are going to correlate further and prove early February values were significant technically.
Why are Cryptos Selling Off Now?
The broad cryptocurrency market has been exuberant since December of 2020. Bitcoin, Ethereum, Dogecoin and many other digital currencies have enjoyed a whirlwind of buying speculation. The parade higher was certain to run into a roadblock at some point and suffer a reversal lower. Bullish markets do not last forever. Many will say the cryptocurrencies have produced a bubble the past four months of trading. The question is if this reversal lower, which has picked up momentum this week, is going to continue, or if BTC/USD, ETH/USD and others will begin to see speculative buying generated on the notion that the market has had a healthy selloff and now is the time to wager on higher prices again.
Bearish sentiment has certainly crept into the cryptocurrency market. Bitcoin and Ethereum and its major counterparts have suffered from large booms and busts before. Speculators need to decide if this time is different and an opportunity to take advantage of BTC/USD and ETH/USD near important mid-term support levels exists. Cautious traders may not be ready to be buyers yet. Yes, they may miss out on the next move up, but maybe they will prefer to try and sell cryptocurrencies on speculative bearish wagers and aim for lower values. Or, perhaps they will wait for one more solid leg down before being buyers.
False Flags and Speculation Within Cryptocurrencies
Traders will need to be highly alert and question all short-term price action. Will potential moves higher be reactions to major buyers taking advantage of support levels being demonstrated? Or will they prove to be false flags and simply suck speculators into buying positions, which will allow others to ignite selling positions and get out of the market with some form of profits?
Influencers like Elon Musk and Mark Cuban, among a hundred others, make the cryptocurrency market speculative, entertaining and extremely volatile.
What Does This Mean for Me?
Traders need to understand that the dynamics within the marketplace react abruptly to influencers who like to sing the praises of various cryptocurrencies. News flow does affect sentiment too – particularly when U.S. government agencies or officials comment on regulations and supervision of cryptos.
Importantly too, traders need to remain aware that BTC/USD and ETH/USD are not fully mature speculative assets yet, and prices will likely remain highly volatile within the foreseeable future. The high volatility will probably give good trading opportunities both long and short, and any route to profitably trading cryptocurrencies in the near term will need to involve hard stop losses, small position sizing, and going with the flow of the dominant short-term price action.